Is Twitter Eying An IPO?Cecily Kellogg
Rumors are flying that Twitter is considering going public as early as 2014, and speculation is wild as to Twitter’s value with some estimating it being worth $10 BILLION.
Dennis Berman, blogger for the Wall Street Journal, claims he initially tried to prove that Twitter’s value wasn’t that high, only to have the facts prove him wrong.
Twitter isn’t worth $10 billion if you benchmark it to its current financials. But that hardly matters now. The prime question is just how big Twitter can get—and how profitable.
In what is being seen as a signal that an IPO is being considered, Twitter recently increased the cost of a sponsored tweet, according to Peter Kafka of AllThingsD.
witter’s newest price hike went into effect earlier this year, and represents a 33 percent increase over the $150,000 rate the company was asking for in 2012. And it’s up 150 percent from the $80,000 a day it was getting for the ads back when it launched them in 2010.
This high value figure being placed on Twitter is really more about what it WILL be than what it is right now. Alex Wilhelm at The Next Web tries to break down the connection between the higher ad price and the valuation.
Assuming that Twitter can sell a Promoted Trend per day, the ad slot would generate $73 million per year in revenue for the company. It seems that Twitter sells but one per day, as its support website indicates that “Promoted Trends are visible to all users on Twitter.com while they are being promoted.” It appears that Twitter only ever displays one at a time if you have seen two, sound off in the comments thus limiting the total available revenue from Promoted Trends to $200,000 per day, or its base cost.
It’s clear we haven’t seen the last of social media sites going public. But with hard lessons learned by other sites like Facebook, Zynga, and Groupon, it’s likely that Twitter will approach this IPO carefully.